Market trade in the red after a firm start

The Indian equity markets are trading in the red after making a firm start on the back of supportive global cues. The US markets moved higher overnight on getting good economic reports, and the financial stocks led the rally and the jobs data filled the confidence among traders that the economy was on recovery path, though, Asian peers were trading on a mixed note at this point of time. Back Home some selling pressure was witnessed in key heavyweights leading the markets lower. The BSE's -- Sensex -- and NSE's -- Nifty -- were trading below their crucial level of 20,300 and 6,100 respectively. On the sectoral front, software, technology and fast moving consumer goods were the top gainers in trade; on the other hand auto, banking and capital goods were the major losers on the BSE sectoral space. Meanwhile, the PSU oil marketing companies (OMC) viz Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) all were trading with a cut of about one percent after Oil Minister Murli Deora signalled on Wednesday that the government will not increase diesel prices for now. While IT major Infosys, TCS, Wipro and HCL Tech all opened in the green on the back of the rise in dollar. The broader indices were also feeling some selling pressure. The market breadth on the BSE was positive; there were 897 shares on the gaining side against 840 shares on the losing side while 63 shares remained unchanged.

The BSE Sensex opened at 20,395.50; about 94 points higher compared to its previous closing of 20,301.10, and has touched a high and a low of 20,425.85 and 20,260.12 respectively. The index is currently trading at 20,268.99, down by 32.11 points or 0.16%. There were 15 stocks advancing against 15 declines on the index.

The overall market breadth has made a positive start with 49.83% stocks advancing against 46.67% declines. The broader indices too were feeling some selling pressure; the BSE Mid cap was down 0.19% while Small cap was up by 0.06%.

The top gaining sectoral indices on the BSE were, IT up by 0.40%, TECk up by 0.32%, FMCG up by 0.27%, HC up by 0.24% and CD was up by 0.16%. While, Auto down by 0.73%, Bankex down by 0.64%, CG down by 0.44%, PSU down by 0.44% and Power down by 0.10%, were the major losers on the index.

The top gainers on the Sensex were Tata Steel up by 0.79%, Tata Power up by 0.75%, HDFC Bank up by 0.59%, Bharti Airtel up by 0.49% and Hindalco was up by 0.47%.

Sterlite Industries down by 3.17%, Bajaj Auto down by 3.11%, SBI down by 1.90%, Cipla down by 1.67% and Hero Honda down by 1.40% were the top losers on the index.

Meanwhile, India's services sector growth slowed down a bit in December from the four-month high seen in November. However, in an absolute sense, the growth is still very strong and business activity is increasing fast with increased backlogs of work, sustained employment growth and increasing cost and prices, a survey showed on Wednesday.

The seasonally adjusted HSBC Purchasing Managers' Index (PMI) for the service sector activity eased to 57.7 in December from 60.1 in November. The composite index, which accounts for both the services and manufacturing sector, as a result, also came down to 58.9 in the last month from 61.3 in November. Both however remain substantially higher than the watershed mark of 50 which separates expansion from contraction.

The survey results showed incoming new business received by service companies in India increased strongly in December, which was the seventh consecutive increase since May 2009. However, the expansion in December was slower than the last month, but still higher than the seventeen-month low recorded in October. It was also below the long-run series average. Same was the case in manufacturers where growth was rapid but at a slower pace than in November.

Despite the weaker rise in new work intakes, outstanding business in the Indian economy increased during December for a second month running. Respondents in both the manufacturing and service sectors indicated that backlogs of work had increased, although the rate of accumulation slowed in the former. Employment in the Indian service sector also increased though at a moderate pace during the month under review, said the Markit research in a press release detailing the survey results.

Also, the results from the December PMI clearly signalled a sharp rise in input costs faced by companies in India. The latest rise was the fastest in seven months, and was driven by increased input prices in both the manufacturing and service sectors. Output prices also increase significantly during December, and at a pace above the long-run series average. This indicates that producers were finding it easier to pass on higher costs to the consumers, suggesting a strong demand scenario.  Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India at HSBC said, 'The upturn in the service sector continued in December and companies remained optimistic about the outlook, although the respective index readings eased from the previous month. The expansion in activity was primarily driven by new business, which benefitted employment but also led to a small increase in outstanding business. As we saw for the manufacturing sector, strong growth momentum pushed up input costs (mainly from higher wages and fuel costs) at an accelerated pace and service sector companies saw increasing scope (and need) to pass on these higher costs to end-consumers. The tightening capacity constraints and rising inflation pressures call on RBI to deliver on its hawkish statement and resume tightening in early 2011.'

The S&P CNX Nifty opened at 6,107.00; about 28 points higher compared to its previous closing of 6,079.80, and has touched a high and a low of 6,116.15 and 6,070.10 respectively. The index is currently trading at 6,073.50, down by 6.30 points or 0.10%. There were 23 stocks advancing against 27 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 1.49%, HCL Tech up by 1.49%, GAIL up by 0.98%, Sesa Goa up by 0.88% and Bharti Airtel up by 0.85%.

The top losers of the index were Sterlite Industries down by 3.04%, Bajaj Auto down by 2.89%, Cipla down by 1.81%, SBI down by 1.72% and Ambuja Cement was down by 1.67%.

Asian market were trading on a mixed note; Hang Seng was up 30.43 points or 0.13% to 23,788.25, Nikkei 225 was up 125.15 points or 1.21% to 10,505.92, Straits Times was up 19.46 points or 0.60% to 3,273.71 and Taiwan Weighted was up by 14.45 points or 0.16% to 8,860.76.

On the flip side, Shanghai Composite was down 6.72 points or 0.24% to 2,831.87, Jakarta Composite was down 27.40 points or 0.72% to 3,756.31, KLSE Composite was down 0.39 points or 0.02% to 1,565.78 and Seoul Composite was down by 3.88 points or 0.19% to 2,078.67.

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